LANSING -- The U.S. government can't set interest rates on federally-backed student loans to avoid turning a profit on borrowing by college students, a Government Accountability Office report says.

The GAO report was ordered as part of a bipartisan compromise on student loan interest rates last summer, which indexed rates for federal Direct Loans to the interest rate on 10-year Treasury bills and capped the maximum rate students would be forced to pay.

Some estimates indicated the federal government would earn $66 billion at the end of fiscal year 2013 from student loan repayment, but the GAO report cautions that a detailed accounting of exactly how much profit or loss the U.S. Department of Education would record depends entirely on repayment of the loans, a process which could take as long as 40 years.

The report does find that total costs for running the Direct Loan program have ballooned in recent years, with the oversight cost of the program expanding by $550 million between 2007 and 2012.

The GAO attributes the growth to a 2009 change in federal law that eliminated a program where private banks made federally guaranteed student loans and instead brought those borrowers into the Direct Loan program. The report also points to growth in the number of borrowers as the economic downturn sent more people into college classrooms.

The administrative cost per borrower has remained relatively constant despite the increase in the volume of borrowers, the report states. An analysis last summer by the Consumer Financial Protection Bureau estimated that more than $569 billion in Direct Loans were still outstanding.

The cost of the Direct Loan program overall is extremely sensitive to the overall cost of government borrowing, according to the GAO report, and because of how long repayment of loans may take, the amount of interest repaid by borrowers may not fully cover the government's cost of borrowing.

"As a result, borrower interest rates that are needed to cover Direct Loan costs at one time may not cover costs at another time," the report states.

The report concludes that changing interest rates more often could help avoid large profits, but may result in more confusion for borrowers and could make it harder to anticipate how policy changes would affect borrowing costs.